Activist investor's call to oust CEO is heeded

Leader for past three years to depart from Sugar Land company after activist investor pushed for change

Furmanite technicians install a leak sealing enclosure for a client. Furmanite is part of Team.

Sugar Land-based Team Industrial Services is removing its chief executive after an activist investor called for his ouster from the financially struggling company.

Ted Owen, who has served as CEO for the past three years, agreed to step down on Monday, allowing Team to install board member and retired Chevron Corp. executive Gary Yesavage as its interim CEO while a search is conducted. Team, which has reported four consecutive quarters of net losses, is an industrial services company primarily focused on the energy and petrochemical sectors.

The move follows a strongly worded letter last week from New York investment firm Engine Capital Management that largely blamed Owen for Team's plummeting stock value and called for his removal.

"Besides the fact that Mr. Owen has overseen massive value destruction through poor management and poor capital allocation, he is not the right leader for an operational turnaround," the letter said. "The best chance for a successful turnaround at Team lies with having a strong operator at the helm, not a CEO with a financial background like Mr. Owen."

Activist investors, the individuals and funds that hold large shares of company stock, have pushed changes atop many big companies, both within and outside the energy sector, in recent years. Carl Icahn, the one-time corporate raider and one of the best know activist investors, forced CEO changes at the liquefied natural gas exporter Cheniere Energy and the offshore drilling contractor Transocean. Other activist investors ousted CEOs at the exploration and production companies Chesapeake Energy and SandRidge Energy.

Activist investors also have also driven NRG Energy and Apache Corp. to divest certain assets, as well as change CEOs, and are now fighting to prevent the merger of The Woodlands chemical maker Huntsman Corp. with Swiss-based Clariant.

At Team, Owen served as the longtime chief financial officer before becoming CEO. He will continue serving as a special adviser at Team before officially retiring at year-end.

In August, Owen bemoaned "very disappointing results" in a conference call with analysts. With oil prices still low and many of Team's customers continuing to cut costs, Owen blamed project cancellations, smaller contracts and customers deferring maintenance projects for the poor results. In the most recent quarter, Team reported an $11.1 million loss, compared with a $7.4 million profit during the same three months last year.

Team's stock has plunged 65 percent from $39.25 at the beginning of December to $13.50 at the end of last week.

"Team is in a period of transition," Owen said in a statement Monday, "and I believe now is the right time for the company to bring in new leadership that can guide our people and our customers into the next phase of success and value creation."

Owen oversaw Team's growth through acquisitions of Houston companies Furmanite and QualSpec. But Engine Capital criticized Team for overpaying for the companies and failing to efficiently integrate them.

The Furmanite business, which was struggling before it was acquired, has especially weighed down Team finances, Owen has acknowledged.

Jordan Blum is a senior energy reporter at the Houston Chronicle since 2015. He has extensively covered the industry from the 2014 bust in oil prices to the more recent boom in West Texas’ Permian Basin. He has written about everything from Texas’ national lead in renewable wind power to the Houston area’s growing dominance in petrochemical and plastics manufacturing.

Previously, Jordan was an award-winning reporter at The Advocate in Baton Rouge and New Orleans as a statehouse reporter and education writer, and then as the newspaper’s Washington Bureau chief. Jordan is a New Orleans native who graduated from Texas Christian University with a journalism degree before going back to work at daily newspapers in Louisiana.